- Travel agency Webjet (WEB) closed marginally higher today on the back of a pleasantly surprising annual report
- Though revenue slipped 27 per cent and statutory profit a whopping 338 per cent, this was to be expected in the face of COVID-19
- It seems shareholders were impressed with Webjet's cash position — with $320 million on hand — and ability to treat water until the travel market recovers
- Managing Director John Guscic said now that Webjet has learnt to operate on a reduced cost base, it will be ready to take off at speed once travel returns
- Webjet shares tacked on 7.6 per cent today to close at $3.68 each
Embattled travel agency company Webjet (WEB) closed marginally higher today on the back of a 'not as bad as we thought' annual report.
With COVID-19 ravaging travel stocks throughout the second half of the year, Webjet's soft annual revenue and missed profit is likely no surprise to investors. Revenue slipped 27 per cent to $266.9 million over the year, while statutory profit after tax declined a whopping 338 per cent.
Over the 2019 financial year, Webjet made just over $60 million. Over the 2020 financial year, Webjet lost $143.6 million. Annual statutory earnings before interest, tax, depreciation and amortisation (EBITDA) were negative by $91.3 million.
Nevertheless, the company told shareholders today it experienced a record first half of operations before the pandemic struck.
In the first half of the financial year, total transaction value (TTV) was $2.3 billion, revenue was $217.8 million, and EBITDA was $86.3 million.
Moreover, Webjet finished the year in what it called a "strong capital position," with around $320 million cash on hand and its debt maturity extended to November 2022.
Managing Director John Guscic said Webjet was on track for stellar growth before the virus.
"The arrival of COVID-19 had a devastating impact on the global travel industry, including Webjet, in the second half of the year as government-imposed travel restrictions and closed borders," John said.
"Faced with a significant fall in bookings and nominal revenues in all our businesses, we focused on what we could control," he explained. "We materially reduced our costs and fortified our balance sheet."
He said the company is now well-equipped to survive an extended period of traveller uncertainty.
On top of John's confidence, shareholders may have been encouraged by the underlying financial results — meaning those which ignore one-off costs and gains.
For example, Webjet's net loss after tax was $42.3 million for the year on an underlying basis — still a heavy loss, for sure, but much lighter than the $143.6 million statutory figure. On an underlying basis, EBITDA was positive by $26.4 million.
Moreover, John said now that Webjet has learnt to operate on a reduced cost base, it will be ready to take off at speed once travel returns.
"Travel is aspirational and exciting and once markets re-open, we expect to see unprecedented airline, hotel and tourism offerings — it will be a time of rediscovering the world," he said.
Of course, he admitted it is impossible to predict when exactly the travel market will recover.
Nevertheless, shareholders seemed pleasantly surprised with today's report, with Webjet shares tacking on 7.6 per cent to close at $3.68 each. This is still a far cry away from the $10-per-share price Webjet enjoyed before the pandemic hit.